Starbucks Integrated Report 2019

Dajzhe Scott
OGL 260
Mar.1.2020
 Starbucks Coffee Company
Purpose of Analysis

In this report, I examine the way Starbucks create value to its various stakeholders while building
capital and relationships and transparency in the community. I examine the 2019 Fiscal Annual
Report.

Our Values

With our partners, our coffee and our customers at our core, we live these values:

 Creating a culture of warmth and belonging, where everyone is welcome.

 Delivering our very best in all we do, holding ourselves accountable for results.

 Acting with courage, challenging the status quo and finding new ways to grow our
company and each other.

 Being present, connecting with transparency, dignity and respect.

Our Mission

To inspire and nurture the human spirit - one person, one cup and one neighborhood at a time.

About Us

Starbucks coffee company began as a small store front coffee shop in 1971, in Seattle,
Washington. Now Starbucks have become one of the leading brands and retailers of coffee in the
world. Originally privately owned, as of June 26, 1992 Starbucks became publicly owned.
Starbucks now has over 30,000 retail stores in 80 markets. The goal of Starbucks does not only
focus on the selling or serving of coffee but to provide a place for gatherings of family and
friends or just a place where you can go and be recognized and treated equally with dignity and
respect.

Creating Value

Our firm creates value for our customers by providing high quality products and
memorable service consistently. This allows the pleasing of its loyal customer and encourages
the return of new visitors. Our firm is focusing on creating value from just serving coffee to
serving coffee with an experience. When you purchase a cup of coffee from Starbucks, you are
not just purchasing coffee. You are purchasing the varieties of flavors, tastes, and the experience
as well. The experience of having a home away from home, the experiences of being recognized
and treated with dignity and respect, and the gaining of relationships that are true and genuine.

Our firm creates value for our partners by providing an environment that is inclusive and
promotes development in all aspects their life. When you come to work, you are not only serving
customers and making products, you are given the opportunity to learn new skills and mindsets
that can better you as a person not only as a partner. We offer paid tuition to ASU, health and
dental benefits, Bean Stock Grants, 401k plans, continue training, commuter benefits, paid
maternity and paternity leave, and much
more. These benefits motivate our
partners to want to come to work and
serve our customers. When your
employees are happy, they will make
your customers happy.

STARBUCKS.COM/PARTNERS
 Governance
Kevin Johnson- President and Chief executive officer

FIGURE 1

Rosalind Brewer- Group president, America’s chief operation officer

FIGURE 2

Cliff Burrows- Group President Siren retail

John Culver- group president, international, Channel development and Global Coffee and Tea

Resources & Capital

At Starbucks we use multiple resources to build its brand and to create value. Some resources
include structural, natural, human, relational, symbolic, and financial.

Financial Capital
The company continues to reinvest in its partners and suppliers to better the Starbucks brand and
create value. The financial statements are measured in single year metrics. In the fiscal year
ending in 2019 Starbucks earned an annual revenue of 26.5 billion dollars with majority from
company operated stores. The Starbucks fiscal year is from Oct 1st – Sept. 30th. The company
measures the revenue and its financial capital of its corporate owned stores separately from its
licensed stores.
Manufactured Capital
Starbucks employed approximately 346,000 people worldwide as of September 29, 2019. 630 of
these stores were open in Q4 of this fiscal year. In the U.S., Starbucks employed approximately
218,000 people, with approximately 209,000 in company-operated stores and the remainder in
support facilities, store development, roasting, manufacturing, warehousing and distribution
operations. Approximately 128,000 employees were employed outside of the U.S., with
approximately 124,000 in company-operated stores and the remainder in regional support
operations

We own most of our roasting facilities and lease most of our warehousing and distribution
locations. As of September 29, 2019, Starbucks had 15,834 company-operated stores, almost all
of which are leased. We also lease space in various locations worldwide for regional, district and
other administrative offices, training facilities and storage. In addition to the locations listed
above, we hold inventory at various locations managed by third-party warehouses.

Natural Capital

Our firm is committed to being a deeply rooted company in the communities where we do
business. We are focused on sourcing high-quality coffee and tea, reducing our environmental
impacts and contributing positively to communities around the world. With this focus we are
reducing our carbon footprint. Starbucks chief executive officer Kevin Johnson, announced a
renewed focus on sustainability, all with an eye toward eventually “giving more than we take
from the planet.” “Our aspiration is to become resource positive — storing more carbon than
we emit, eliminating waste, and providing more clean, freshwater than we use,” Johnson, wrote
in a letter.

Starbucks has also invested in renewable energy to power our locations since 2005. We steadily
increased the amount of renewable energy we used until we powered 100% of corporate
locations with renewable energy. Contributing to the protection of the environment we also
increase our reusable products by creating napkins
Human Capital & Relationship Capital
Our company biggest value is human and relationship capital. This capital is what we
value the most, experience. We strive to provide outstanding experience and relations with our
customers, our partners and our suppliers. With our partners we continue to develop them and
teach them. There is always ongoing training and coaching, there are many development classes
to ensure our partners are knowledgeable about our company and products. We provide them
with many tools to help them achieve goals and convenience. Offering certain benefits like
paternity and maternity leave, childcare benefits, and commuter benefits allows some burdens to
be lifted from our partners to help them succeed. We offer rewards for tenured partners and for
trainers who train. We want to keep our partners happy who in return will keep our customers
happy. Happy customers build loyalty and encourages their return. We employ 346,000
employees and are continuing growing this number. We strive to provide a consistency of
equality and transparency. An example of how we have done this was our pledge to hire 10,000
refugees over a 5year plan.

For our community and suppliers, we provide a network for people to develop relations
and give back. From volunteer and community services to donating to charities. We also treat
everyone equal and inclusive. We include suppliers worldwide and treat them equally in pay and
other aspects. Almost all our coffee we serve is single-origin premium coffee from all over.

When it comes to our customers, we want to be the home away from home. Your
customer journey starts when you cross over our threshold and we are striving to give you a
consistent memorable experience for anyone that comes through our doors. We enforce the gift
of dignity and respect to everyone that comes through our door no matter what situation they are
experiencing. For our loyal customers we have a rewards program for them to be rewarded.

Symbolic Capital
Our brand is an important value that we have. We want to be known for having dignity and
respect to everyone human being. We want to be known for providing the highest quality
products. Our brand has become so reputable that we removed our name and the word “coffee”
from our logo. With doing this it was no worry in our minds that without the words I logo will
 not be recognize. Our name and our logo are known. Also, we have over 15,000 license stores.
License stores are like franchise stores, but the licensee does not own the store but more so rent a
license to sell the product. This protects the brand of Starbucks by limiting some of the freedom
of the licensee.

Structural Capital

Our company is broken up into geographic

divisions. These are Americas (US, Canada
and Latin America), Europe, Middle East
and Africa (EMEA), China/Asia Pacific
(CAP), Channel Development, and all other
segments. Each

FIGURE 4

Stakeholders & Accountability

We partner with these stakeholders to create value with them and how:

 Customers- Receive high quality service and products.

Experience a welcoming environment regarding relationships established with
employees. We create value from keeping the customer experience at its focus, frequent
training, and refresher courses for partners to ensure they are knowledgeable about
products and providing excellent service.
 Suppliers- Receive compensation for goods sold and receive a demand for goods.
We create value for the suppliers by including suppliers from all over the world and
providing transparency to farmers.
 Employees- Ensure employee satisfaction and employee tenured. We provide benefits
and work compensation.
  Government- We are held accountable by the government to ensure we are following
food safety regulations. Some government organizations that hold us accountable are the
FDA, GFSI, OAL, and in California the OEHHA. In order to ensure our stores are
following food safety regulations we hire a third-party company known as ECOSURE to
audit our stores.

Our company feels accountable to our customers and the owners. These
stakeholders have high power in our company because their actions can have the biggest
affect on the success of our company.

Risks and Externalities

Some risk factors that may impact future business is the U.S economy. If the economy fails and
people have less money than they would likely not purchase Starbucks as much as before.
Another risk would be bad quality products from our suppliers and third parties. These can affect
the brand of the company and negatively affect the reputation. Another risk factor is health. The
medical opinions about consuming our products and contamination incidents (whether true or
false) can negatively affect the business.

Recommendations
I think the company is doing great with its transparency, accountability, and capacity for
integrated thinking. I feel like they can improve more on consistency across all markets. This is
easier said than done due to the different regulations and laws in each country and market. Our
company can strengthen its relationships with its stakeholders by continuing to challenge the
status quo and be the diamond in a room full of rubies. Starbucks does a great job of providing
insight on all its capitals and discusses everyone that is included in the company.

Starbucks demonstrated connectivity through providing an outline of its various resources and
then connecting them together through timelines, etc. This can be found on its website.

Integrated Reporting can help Starbucks tell its value creation story in a more comprehensive
way because it provides a single report that analyzes all aspects of the business. Starbucks has so
many different reports and place to analyze its value creation that an integrated report can be the
one report that can incorporated all aspects of capital and value creation.
References

 Figure1. https://www.geekwire.com/2015/starbucks-names-former-microsoft-juniper-
exec-kevin-johnson-new-president-coo/
 Figure 2. https://money.cnn.com/2017/09/06/investing/starbucks-rosalind-brewer-coo-
walmart-sams-club/index.html
 Figure 3. https://stories.starbucks.com/leadership/cliff-burrows/
 Starbucks.com
 Starbucks 2018 Annual Letter to Shareholders
 Starbucks 2019 Annual Letter to Shareholders
 Starbucks FY19 Annual Report
 Lisa Baertlein, January 5, 2011, https://www.reuters.com/article/us-starbucks-
idUSTRE7045YF20110106

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 Figure 4. https://research-methodology.net/wp-content/uploads/2017/04/Starbucks-
Organizational-Structure.png